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Can Irish Water soak up the cost of water treatment?

Cantillon: Construction industry warns lack of infrastructure will affect new house builds

Thu, Jun 15, 2017, 05:45

Anti-water charge protestors hail the shelving of the domestic levy as a victory. That could look hollow if problems with the network hit housing and jobs. Photograph: Dara Mac Dónaill

It was probably only a matter of time, but water treatment has emerged as the Republic’s latest infrastructure bottleneck. Years of underinvestment in a patchwork of networks, overseen by different local authorities, appear to be coming home to roost.

Developers are reporting that Irish Water, the State utility set up to take charge and modernise the network, is telling them that it cannot connect proposed new housing developments. Yesterday, this prompted Construction Industry Federation director Tom Parlon, and its president, Dominic Doheny, to call for investment in the Republic’s water infrastructure.

The construction chiefs are not really pointing the finger at Irish Water. Instead they suggest that, as domestic charges for the service are up in the air, the company’s ability to raise the cash needed to improve the network that delivers a vital resource to the Republic’s homes and businesses is limited.

Commercial customers

Irish Water does not agree with this. It has various sources of revenue, including income from commercial customers, who have always paid for the service, and State funding approved by the Commission for Energy Regulation, which oversees it.

That may be, but when the previous government wanted to introduce domestic water charges, it made the point that the money was needed to pay for the much-needed redevelopment of our treatment and supply networks. Presumably that hasn’t changed.

The network will still have to be upgraded, the money will be spent, but probably at a slower pace, as it will come from the Exchequer, which is subject to other demands and constraints. A delay in the redevelopment of the water system could slow the construction of new homes and possibly hit industrial expansion.

Anti-water charge protestors hail the shelving of the domestic levy as a victory. That could look hollow if problems with the network hit housing and jobs. Or if a dry summer creates shortages, or if beaches are closed to swimming because they are polluted by domestic waste that could otherwise be easily treated.

A man with a profound understanding of how money is made and lost, Kerry-born economist Richard Cantillon (1680s-1734) is a fitting namesake for this long-running column. Since 2009, Cantillon delivers succinct business comment on the stories behind the news.